Many US/UK dual citizens, and even those who simply have a US parent or passport, don’t realise they may still have to file US tax returns while living in the UK. This guide explains how dual citizenship affects your tax obligations, the reliefs available to avoid double taxation, and how to stay compliant. It includes a step-by-step checklist, filing timeline and advice on when to get professional help with US taxes abroad.
For many people with ties to both the US and the UK, understanding how citizenship affects your taxes can be surprisingly complicated. Even if you’ve lived in the UK your entire life, you could still have US tax obligations, sometimes without realising it.
That’s because the United States is one of the few countries in the world that taxes based on citizenship rather than residence.
If you were born in the US, hold a US passport or even have a US parent, you may be classed as a US citizen for tax purposes, even if you’ve never lived or worked there.
This article explains what it means to be a dual citizen of both the US and the UK, how to avoid double taxation and how to get your filings in order whether you’re already a dual citizen or simply suspect you might be “US-connected.”
It also includes:
Disclaimer: This article provides general information only and should not be considered tax or legal advice. Tax rules can change, and individual circumstances vary. For tailored advice, always consult a qualified US/UK tax professional.
If you hold both US and UK citizenship, or were born in the US and still hold a US passport, you’re likely considered a US citizen for tax purposes.
That means you must report worldwide income to the IRS every year, regardless of where you live or where your income is earned.
Filing thresholds are the same as for any US taxpayer. You might not owe tax thanks to credits and exclusions, but you’re still required to file.
Even green card holders who live permanently in the UK are treated as US tax residents until they formally relinquish that status.
The good news is that the US–UK tax treaty, along with several key tax mechanisms, is designed to ensure the same income isn’t taxed twice. The three most common tools are:
If you live and work full-time in the UK, you may be able to exclude up to $130,000 of foreign earned income in 2025 from US taxation.
To qualify, you must pass either:
FEIE can be combined with a foreign housing exclusion, generally capped at 30% of the FEIE limit (subject to IRS location lists). However, the FEIE doesn’t apply to all income, it excludes earned income, not dividends, interest, or capital gains.
If you pay tax in the UK, you can usually claim a dollar-for-dollar credit on your US return for those UK taxes.
The Foreign Tax Credit is often a better choice than FEIE for high earners or those with investment income, since it allows unused credits to carry forward. It also avoids problems with US retirement contributions and state taxes that the FEIE sometimes causes.
The treaty clarifies which country has the right to tax certain types of income, such as pensions, Social Security, or investment gains.
Even when the treaty provides relief, you still have to disclose it by filing the proper IRS forms (e.g. Form 8833). Simply relying on the treaty without filing can lead to compliance issues later.
Beyond income tax, the US requires detailed reporting of non-US financial accounts. Missing these can result in severe penalties, even when no tax is owed.
If your aggregate balance across all non-US accounts exceeds $10,000 at any point in the year, you must file an FBAR.
The deadline is 15 April, with an automatic extension to 15 October.
If you live abroad, you must file Form 8938 if your total foreign assets exceed $200,000 at year-end or $300,000 at any time ($400k / $600k for joint filers).
FBAR and FATCA are separate requirements. Many dual citizens must file both.
Other forms to be aware of include:
If you’ve only just discovered that you should have been filing US tax returns, you’re not alone. Many dual citizens, sometimes called “accidental Americans”, find themselves in this position.
The Streamlined Filing Compliance Procedures remain available in 2025.
If your failure to file was non-wilful (i.e. unintentional), you can file the last three years of tax returns and six years of FBARs without facing penalties. You must certify that your non-compliance was accidental and pay any tax due.
If your case is more complex or deliberate, other disclosure options exist, but they should only be attempted with professional advice.
We have created an article which provides a detailed explanation of Accidental Americans and the Streamlining process.
Confirm citizenship, gather basic details about income and assets, and decide which forms may apply.
Model FEIE versus FTC for your situation and determine whether you meet residency tests.
Request annual statements from banks and investment providers, plus pension and ISA summaries.
Complete your US returns, FBAR and FATCA forms. If you’re late, prepare the Streamlined package instead.
After filing, set a reminder each January to update your figures and plan ahead for currency fluctuations or new income streams.
You can probably manage to get things in order yourself if:
Even small mistakes, like using the FEIE when the FTC would have eliminated all tax, can be costly to fix later. A cross-border specialist can also coordinate filings with UK accountants to ensure consistency across both countries.
Yes. Both the US and the UK can tax your income. The United States taxes citizens on worldwide income regardless of residence, while the UK taxes residents on income earned while living in the UK. However, the US–UK tax treaty, along with the Foreign Earned Income Exclusion and Foreign Tax Credit, is designed to avoid double taxation in most cases. You’ll usually file returns in both countries but only pay tax once.
There are three main ways to avoid paying tax twice:
For the 2025 tax year, the Foreign Earned Income Exclusion (FEIE) limit is $130,000. This exclusion applies only to earned income such as wages or self-employment income. To qualify, you must meet either the Physical Presence Test or the Bona Fide Residence Test and file Form 2555 with your US tax return.
For the FBAR (FinCEN Form 114), you must file if the total of all non-US accounts exceeds $10,000 at any point in the year. The deadline is 15 April with an automatic extension to 15 October. For FATCA (Form 8938), if you live abroad you must file if your total foreign financial assets exceed $200,000 at year-end or $300,000 at any time during the year (double for joint filers). Both forms report accounts but serve different purposes, and many US/UK dual citizens must file both.
If you’ve missed filing in previous years, you may qualify for the Streamlined Filing Compliance Procedures. This allows non-wilful taxpayers to file the last three years of US tax returns and six years of FBARs without penalties, provided you certify that the failure to file was unintentional and pay any tax due.
Yes. The IRS does not recognise UK ISAs as tax-free accounts. Income and gains inside an ISA are taxable on your US return. ISAs holding UK-domiciled funds may also be classed as Passive Foreign Investment Companies (PFICs), which require Form 8621 each year. UK pensions usually qualify for tax deferral under the US–UK tax treaty but must still be disclosed.
You can file your own US return if your situation is simple, for example if you only have UK employment income and no PFICs, trusts or late filings. However, if you hold ISAs, own a UK limited company, receive pension income, or are catching up on missed years, it’s wise to use a specialist familiar with US/UK cross-border tax rules.
If you formally renounce your US citizenship, you may trigger an “exit tax” depending on your income level and net worth. You will also need to file a final US tax return and Form 8854 to confirm your exit. Professional advice is essential before taking this step.
Under FATCA, foreign banks and financial institutions, including those in the UK, must identify and report US-linked account holders to HMRC, which shares the information with the IRS. This global data-sharing makes it much harder for US citizens living abroad to remain unreported or unaware of their filing obligations.
Explore these related guides to help you stay compliant, confident and better informed about your finances as a US citizen living in the UK.
If you’re unsure where to start or want reassurance that you’re handling things correctly, we can help.
Our trusted partners specialise in US tax advice for people living abroad, including dual citizens and those who suspect they may be US-connected.
During a short, free discovery call, they'll explain your options, discuss potential next steps and present any costs of using their services. Our partners are here to help you stay compliant without paying more tax than necessary and the discovery call is a no-obligation, get-to-know-you conversation for you both.
